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Vivendi's GVT may team up with Ergen's EchoStar in Brazil

By Liana B. Baker

NEW YORK, Oct 1 (Reuters) - French media group Vivendi , hoping to offer pay-TV service to Brazilians eager to watch World Cup soccer matches and the Olympic Games coming to their country, said on Tuesday its Brazilian unit GVT had started negotiating with satellite company EchoStar Corp to set up a pay-TV venture.

The venture with Echostar, which is owned by billionaire Charlie Ergen, would be managed by GVT and headquartered in Brazil if the deal goes through, the companies said in a joint statement.

They said the venture should benefit from an expected rise in demand driven by the FIFA World Cup in 2014 and the Olympic Games in 2016. Final details have not been set, the companies said, adding the joint venture is subject to governmental approval.

The companies said they aim to offer a national service that takes advantage of Echostar's licenses for satellite spectrum. EchoStar spent at least $77 million acquiring Brazilian satellite spectrum in 2011, according to a U.S. regulatory filing. EchoStar, the sister company to Ergen's Dish Network , had said it was planning to expand its video and data services in South America but had not revealed any details of its plans until Tuesday.

Macquarie analyst Amy Yong said she expects the companies to each take a 50 percent stake in the company. She called the deal a "significant positive development for EchoStar" because it gives the company a chance to make money off its investment in spectrum in Brazil. GVT may also be interested in tapping EchoStar's pay TV products such as Hopper digital video recorders and Sling technology, she said.

GVT is a small player is Brazil pay TV market but has a presence in about 140 cities and is expanding to 50 more in the next five years, Yong said. It already sells a "triple play" product of broadband Internet, phone and video.

Dish's rival, DirecTV had bid for GVT earlier this year, before the asset was pulled off the market Vivendi. Yong said the joint venture is negative for DirecTV because GVT will now be able to compete better with DirecTV's Brazilian Pay TV provider, Sky Brazil.

Shares of EchoStar were trading 4 percent higher on Tuesday at $45.64. Vivendi shares closed 1.68 percent higher at 17.29 euros in Paris trading.